The Debate Widens - Introduction
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Econometrics As a Pluralistic Scientific Tool for Economic Planning: on Lawrence R
Econometrics as a Pluralistic Scientific Tool for Economic Planning: On Lawrence R. Klein’s Econometrics Erich Pinzón-Fuchs To cite this version: Erich Pinzón-Fuchs. Econometrics as a Pluralistic Scientific Tool for Economic Planning: On Lawrence R. Klein’s Econometrics. 2016. halshs-01364809 HAL Id: halshs-01364809 https://halshs.archives-ouvertes.fr/halshs-01364809 Preprint submitted on 12 Sep 2016 HAL is a multi-disciplinary open access L’archive ouverte pluridisciplinaire HAL, est archive for the deposit and dissemination of sci- destinée au dépôt et à la diffusion de documents entific research documents, whether they are pub- scientifiques de niveau recherche, publiés ou non, lished or not. The documents may come from émanant des établissements d’enseignement et de teaching and research institutions in France or recherche français ou étrangers, des laboratoires abroad, or from public or private research centers. publics ou privés. Documents de Travail du Centre d’Economie de la Sorbonne Econometrics as a Pluralistic Scientific Tool for Economic Planning: On Lawrence R. Klein’s Econometrics Erich PINZÓN FUCHS 2014.80 Maison des Sciences Économiques, 106-112 boulevard de L'Hôpital, 75647 Paris Cedex 13 http://centredeconomiesorbonne.univ-paris1.fr/ ISSN : 1955-611X Econometrics as a Pluralistic Scientific Tool for Economic Planning: On Lawrence R. Klein’s Econometrics Erich Pinzón Fuchs† October 2014 Abstract Lawrence R. Klein (1920-2013) played a major role in the construction and in the further dissemination of econometrics from the 1940s. Considered as one of the main developers and practitioners of macroeconometrics, Klein’s influence is reflected in his application of econometric modelling “to the analysis of economic fluctuations and economic policies” for which he was awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel in 1980. -
Patinkin, the Cowles Commission, and the Theory of Unemployment and Aggregate Supply
Patinkin, the Cowles Commission, and the Theory of Unemployment and Aggregate Supply Mauro Boianovsky Universidade de Brasilia “For a long period before the writing of the first edition [of Money, Interest and Prices] I had been puzzled by the apparent contradiction between the intuitive feeling, on one hand, that there was a connection between a firm’s product-output and its labor-input, and the traditional demand curve for labor, on the other hand, that did not depend explicitly on output and whose sole independent variable was the real wage rate.” (Patinkin, 1989, p. xvi) 1. Introduction This paper offers an account of Don Patinkin’s long time quest for an explanation of the connection between a firm’s demand function for labour and its output. The task faced by Patinkin was how to make sense of an aggregate demand constraint and unemployment phenomena under the assumption that each firm is perfectly competitive (that is, it has a perfectly elastic demand for its output) and, therefore, can sell all it wants to sell at the current market price. The solution he eventually put forward in chapter XIII of his 1956 classic Money, Interest and Prices (henceforth MIP) was based on the notion that the influence of the representative firm’s output on its labour input is reflected in the form of the labour demand function, which features a kink at the employment level corresponding to aggregate demand. The view that unemployment is explained by the involuntary departure of firms from their commodity supply and labour demand curves became the hallmark of Patinkin’s contribution to the development of disequilibrium macroeconomics. -
Mit and Money
Groupe de REcherche en Droit, Economie, Gestion UMR CNRS 7321 MIT AND MONEY Documents de travail GREDEG GREDEG Working Papers Series Perry Mehrling GREDEG WP No. 2013-44 http://www.gredeg.cnrs.fr/working-papers.html Les opinions exprimées dans la série des Documents de travail GREDEG sont celles des auteurs et ne reflèlent pas nécessairement celles de l’institution. Les documents n’ont pas été soumis à un rapport formel et sont donc inclus dans cette série pour obtenir des commentaires et encourager la discussion. Les droits sur les documents appartiennent aux auteurs. The views expressed in the GREDEG Working Paper Series are those of the author(s) and do not necessarily reflect those of the institution. The Working Papers have not undergone formal review and approval. Such papers are included in this series to elicit feedback and to encourage debate. Copyright belongs to the author(s). MIT and Money Perry Mehrling October 22, 2013 I would like to thank all the participants in the HOPE conference for helpful suggestions and stimulating discussion, and in addition Bob Solow, Roger Backhouse, Goncalo Fonseca, Duncan Foley and Roy Weintraub for thoughtful and searching comment on early drafts. 1 Abstract: The Treasury-Fed Accord of 1951 and the subsequent rebuilding of private capital markets, first domestically and then globally, provided the shifting institutional background against which thinking about money and monetary policy evolved within the MIT economics department. Throughout that evolution, a constant, and a constraint, was the conception of monetary economics that Paul Samuelson had himself developed as early as 1937, a conception that informed the decision to bring in Modigliani in 1962, as well as Foley and Sidrauski in 1965. -
Don Patinkin's Ph.D. Dissertation As the Prehistory of Disequilibrium
View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Archive Ouverte a LUniversite Lyon 2 Don Patinkin's Ph.D. dissertation as the prehistory of disequilibrium theories Goulven Rubin To cite this version: Goulven Rubin. Don Patinkin's Ph.D. dissertation as the prehistory of disequilibrium theories. 2010. <halshs-00636821> HAL Id: halshs-00636821 https://halshs.archives-ouvertes.fr/halshs-00636821 Submitted on 28 Oct 2011 HAL is a multi-disciplinary open access L'archive ouverte pluridisciplinaire HAL, est archive for the deposit and dissemination of sci- destin´eeau d´ep^otet `ala diffusion de documents entific research documents, whether they are pub- scientifiques de niveau recherche, publi´esou non, lished or not. The documents may come from ´emanant des ´etablissements d'enseignement et de teaching and research institutions in France or recherche fran¸caisou ´etrangers,des laboratoires abroad, or from public or private research centers. publics ou priv´es. Don Patinkin’s Ph.D. dissertation as the prehistory of disequilibrium theories Goulven Rubin ♦♦♦ Revised for HOPE, july 2010. This work is the outgrowth of ideas first presented in a doctoral dissertation submitted to the University of Chicago in 1947 and then further developed in a series of articles published in various journals and anthologies through the years 1948 to 1954. (1956: vii) The opening sentence of Money, Interest, and Prices , has attracted the attention of most scholars who wrote about Don Patinkin’s works in recent years. As shown by Boianovsky (2006), Merhling (2002) or Rubin (2002a), reading Patinkin’s doctoral dissertation shed new light on his major work. -
A Missing Stop on the Road from Warburton to Friedman-Meiselman
A Missing Stop on the Road from Warburton to Friedman – Meiselman and St. Louis By Michael T. Belongia Department of Economics University of Mississippi Box 1848 University, MS 38677 [email protected] and Peter N. Ireland Department of Economics Boston College 140 Commonwealth Avenue Chestnut Hill, MA 02467 [email protected] June 2021 ABSTRACT: Friedman and Meiselman (1963) typically is recognized as the original study that used a reduced-form equation to evaluate whether fiscal or monetary actions were the dominant influence on aggregate spending. It also provided the foundation for the better- known St. Louis Equation that followed. Missing from this evolution, however, are important precedents by Brunner and Balbach (1959) and Balbach (1963) that also employed a reduced form framework to offer evidence on the same fiscal versus monetary debate. Moreover, they also investigated whether the demand for money function was stable and inversely related to an interest rate, properties necessary in their reasoning before any more general model of national income determination could be developed. With this foundation, they then derived a reduced form expression for personal income from an explicit theoretical model and, in its estimation, they anticipated and addressed some of the empirical criticisms later directed at Friedman-Meiselman and the early versions of the St. Louis Equation. Taken together, the theoretical and empirical work reported in Balbach (1963) and Brunner and Balbach (1959) suggest these papers are clear antecedents of later reduced form expressions and should be recognized as such. Keywords: St. Louis Equation, monetary policy, fiscal policy, reduced form equation JEL Codes: B2, B4, E3 A Missing Stop on the Road from Warburton to Friedman – Meiselman and St. -
Monetary Policy Frameworks and Indicators for the Federal Reserve in the 1920S*
Working Paper Series This paper can be downloaded without charge from: http://www.richmondfed.org/publications/ Monetary Policy Frameworks and Indicators for the Federal Reserve in the 1920s* Thomas M. Humphrey ‡ Federal Reserve Bank of Richmond Working Paper No. 00-7 August 2000 JEL Nos. E5, B1 Keywords: quantity theory, real bills doctrine, scissors effect, policy indicators. Abstract The 1920s and 1930s saw the Fed reject a state-of-the-art empirical policy framework for a logically defective one. Consisting of a quantity theoretic analysis of the business cycle, the former framework featured the money stock, price level, and real interest rates as policy indicators. By contrast, the Fed’s procyclical needs-of-trade, or real bills, framework stressed such policy guides as market nominal interest rates, volume of member bank borrowing, and type and amount of commercial paper eligible for rediscount at the central bank. The start of the Great Depression put these rival sets of indicators to the test. The quantity theoretic set correctly signaled that money and credit were on sharply contractionary paths that would worsen the slump. By contrast, the real bills indicators incorrectly signaled that money and credit conditions were sufficiently easy and needed no correction. This experience shows that policy measures and measurement, no matter how accurate and precise, can lead policymakers astray when embodied in a theoretically flawed framework. *This paper does not necessarily represent the views of the Federal Reserve System or the Federal Reserve Bank of Richmond. The author is indebted to William Gavin, Bob Hetzel, Judy Klein, Mary Morgan, and Anna Schwartz for helpful comments. -
Paul Samuelson's Ways to Macroeconomic Dynamics
A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Boianovsky, Mauro Working Paper Paul Samuelson's ways to macroeconomic dynamics CHOPE Working Paper, No. 2019-08 Provided in Cooperation with: Center for the History of Political Economy at Duke University Suggested Citation: Boianovsky, Mauro (2019) : Paul Samuelson's ways to macroeconomic dynamics, CHOPE Working Paper, No. 2019-08, Duke University, Center for the History of Political Economy (CHOPE), Durham, NC This Version is available at: http://hdl.handle.net/10419/196831 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. www.econstor.eu Paul Samuelson’s Ways to Macroeconomic Dynamics by Mauro Boianovsky CHOPE Working Paper No. 2019-08 May 2019 Electronic copy available at: https://ssrn.com/abstract=3386201 1 Paul Samuelson’s ways to macroeconomic dynamics Mauro Boianovsky (Universidade de Brasilia) [email protected] First preliminary draft. -
Irving Fisher and His Compensated Dollar Plan
Irving Fisher and His Compensated Dollar Plan Don Patinkin his is a story that illustrates the interrelationship between economic his- tory and economic thought: more precisely, between monetary history T and monetary thought. So let me begin with a very brief discussion of the relevant history. In 1879, the United States returned to the gold standard from which it had departed at the time of the Civil War. This took place in a period in which “a combination of events, including a slowing of the rate of increase of the world’s stock of gold, the adoption of the gold standard by a widening circle of countries, and a rapid increase in aggregate economic output, produced a secular decline ˙.. in the world price level measured in gold˙...” (Friedman and Schwartz 1963, p. 91; for further details, see Friedman 1990, and Laidler 1991, pp. 49–50). The specific situation thus generated in the United States was de- scribed by Irving Fisher (1913c, p. 27) in the following words: “For a quarter of a century—from 1873 to 1896—the dollar increased in purchasing power and caused a prolonged depression of trade, culminating in the political upheaval which led to the free silver campaign of 1896, when the remedy proposed was worse than the disease.” This was, of course, the campaign which climaxed with William J. Bryan’s famous “cross of gold” speech in the presidential election of 1896. Fisher’s view of this campaign reflected the fact that it called for the unlimited coinage of silver at a mint price far higher than its market value, a policy that would have led to a tremendous increase in the quantity of money and the consequent generation of strong inflationary pressures. -
The Neoclassical Synthesis
In Search of Lost Time: the Neoclassical Synthesis M. De Vroey and P. Garcia Duarte Discussion Paper 2012-26 IN SEARCH OF LOST TIME: THE NEOCLASSICAL SYNTHESIS Michel De Vroey and Pedro Garcia Duarte ◊ Abstract Present-day macroeconomics has sometimes been dubbed ‘the new neoclassical synthesis’, suggesting that it constitutes a reincarnation of the neoclassical synthesis of the 1950s. This paper assesses this understanding. To this end, we examine the contents of the ‘old’ and the ‘new’ neoclassical syntheses. We show that the neoclassical synthesis originally had no fixed content, but two meanings gradually became dominant. First, it designates the program of integrating Keynesian and Walrasian theory. Second, it designates the methodological principle that in macroeconomics it is better to have alternative models geared towards different purposes than a hegemonic general equilibrium model. The paper documents that: (a) the first program was never achieved; (b) Lucas’s criticisms of Keynesian macroeconomics eventually caused the neoclassical synthesis program to vanish from the scene; (c) the rise of DSGE macroeconomics marked the end of the neoclassical synthesis mark II; and (d) contrary to present-day understanding, the link between the old and the new synthesis is at best weak. JEL codes: B22, B30, E12, E13 Keywords: neoclassical synthesis, new neoclassical synthesis, Paul Samuelson, Robert Lucas, Robert Solow ◊ University of Louvain ([email protected]) and University of São Paulo ([email protected]). The authors gratefully acknowledge Roger Backhouse’s comments on an earlier version of this paper. 1 Introduction Since its inception, macroeconomics has witnessed an alternation between phases of consensus and dissent. -
The Midway and Beyond: Recent Work on Economics at Chicago Douglas A
The Midway and Beyond: Recent Work on Economics at Chicago Douglas A. Irwin Since its founding in 1892, the University of Chicago has been home to some of the world’s leading economists.1 Many of its faculty members have been an intellectual force in the economics profession and some have played a prominent role in public policy debates over the past half-cen- tury.2 Because of their impact on the profession and inuence in policy Correspondence may be addressed to: Douglas Irwin, Department of Economics, Dartmouth College, Hanover, NH 03755; email: [email protected]. I am grateful to Dan Ham- mond, Steve Medema, David Mitch, Randy Kroszner, and Roy Weintraub for very helpful com- ments and advice; all errors, interpretations, and misinterpretations are solely my own. Disclo- sure: I was on the faculty of the then Graduate School of Business at the University of Chicago in the 1990s and a visiting professor at the Booth School of Business in the fall of 2017. 1. To take a crude measure, nearly a dozen economists who spent most of their career at Chicago have won the Nobel Prize, or, more accurately, the Sveriges Riksbank Prize in Eco- nomic Sciences in Memory of Alfred Nobel. The list includes Milton Friedman (1976), Theo- dore W. Schultz (1979), George J. Stigler (1982), Merton H. Miller (1990), Ronald H. Coase (1991), Gary S. Becker (1992), Robert W. Fogel (1993), Robert E. Lucas, Jr. (1995), James J. Heckman (2000), Eugene F. Fama and Lars Peter Hansen (2013), and Richard H. Thaler (2017). This list excludes Friedrich Hayek, who did his prize work at the London School of Economics and only spent a dozen years at Chicago. -
1 CHICAGO and INSTITUTIONAL ECONOMICS1 Malcolm Rutherford
CHICAGO AND INSTITUTIONAL ECONOMICS1 Malcolm Rutherford University of Victoria 1. Introduction For most economists the terms “Chicago economics” and “institutionalism” denote clearly antithetical approaches to the discipline. Various members of the modern “Chicago School” have made highly dismissive remarks concerning American institutionalism. Coase has commented that American institutionalists were anti-theoretical, and that “without a theory they had nothing to pass on except a mass of descriptive material waiting for a theory, or a fire” (Coase 1984, p. 230). Some of these attitudes have their roots in the interwar period, most obviously in Frank Knight’s bitingly critical attacks on the methodology and policy positions of institutionalist and advocates of the “social control” of business (Knight 1932). Nevertheless, what this presentation seeks to reveal is a much more complex interrelation between institutional and Chicago economics. To fully understand this relationship it is necessary to begin with the early years of the Chicago Department of Economics. 2. Chicago Economics and Institutionalism 1892-1919 The Chicago Department of Political Economy was begun in 1892 with Laurence Laughlin as its head. While Laughlin was extremely conservative in his economic and political views, and very much at odds with the historicist or “new” school influence in American economics, he built a department that was extremely diverse in its interests and had significant representation of those critical of “orthodox” economics (Nef 1934). Most obviously, Laughlin brought Thorstein Veblen with him from Cornell, and shortly thereafter placed him in charge of editing the Journal of Political Economy. As Hodgson has argued (Hodgson 2004), Veblen’s years at Chicago (from 1892 to 1906) were remarkably creative ones. -
Political Economy 1957-1982
The Thomas JeffersonCenter Foundation Political Economy 1957-1982 James J\i Buchanan The C. Warren Nutter Lectures in PoliticalEconomy The C. Warren Nutter Lectures in Political Economy The G. Warren Nutter Lectures in Political Economy have been in stituted to honor the memory of the late Professor Nutter, to en courage scholarly interest in the range of topics to which he devoted his career, and to provide his students and associates an additional contact with each other and with the rising generation of scholars. At the time of his death in January 1979, G. Warren Nutter was director of the Thomas Jefferson Center Foundation, adjunct scholar of the American Enterprise Institute, director of AEI's James Madison Center, a member of advisory groups at both the Hoover Institution and The Citadel, and Paul Goodloe Mcintire Professor of Economics at the University of Virginia. Professor Nutter made notable contributions to price theory, the assessment of monopoly and competition, the study of the Soviet economy, and the economics of defense and foreign policy. He earned his Ph.D. degree at the University of Chicago. In 1957 he joined with James M. Buchanan to establish the Thomas Jefferson Center for Studies in Political Economy at the University of Virginia. In 1967 he established the Thomas Jefferson Center Foundation as a separate entity but with similar objectives of supporting scholarly work and graduate study in political economy and holding conferences of econ omists from the United States and both Western and Eastern Europe. He served during the 1960s as director of the Thomas Jefferson Center and chairman of the Department of Economics at the University of Virginia and, from 1969 to 1973, as assistant secretary of defense for international security affairs.